Finding Value in Biotech

This small-cap biotech stock is severely undervalued.

Many thought General Electric ( GE) was cheap at $20 but did not fully discount the negative effects of GE Capital on the broader company. Some thought Potash ( POT) was cheap at $120 but did not realize how a slowing world economy would adversely affect demand for its fertilizer. Dry Ships ( DRYS) looked cheap to some investors at $15, but they failed to factor in the company's dependence on the credit markets as a source of funds.

A good way to screen for relatively cheap stocks is by comparing a company's net cash and market capitalization. If its net cash level is larger than its current market cap, the company warrants additional research.

One intriguing name here is Cyclacel Pharmaceuticals ( CYCC), which has a market capitalization of just $6.1 million, or 30 cents per share, with zero debt and net cash sitting in the bank of $33.7 million, which equates to $1.65 per share in cash.

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